Residential property bequeathed to eight beneficiaries was subsequently sold and realised a capital gain of £80k. Disposal proceeds of £320k.
Each beneficiaries share of the disposal proceeds is £40k and a gain of £10k. There will be no CGT to be paid.
Gov.UK guidance says:
You still need to report your gains in your tax return if both of the following apply:
- the total amount you sold the assets for was more than 4 times your allowance
- you’re registered for Self Assessment
Some of the beneficiaries are registered for self assessment. What is the value to determine whether the disposal should be reported, the total amount the property sold for or each beneficiaries share of the sale proceeds?
My interpretation of HMRC manuals is that it is each individuals share of the disposal proceeds that is the value to be taken to decide whether the disposal needs to be notified to HMRC. Am I correct?
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Replies (6)
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TaxCalc says “no” ...
If you enter the details into the CGT section on TaxCalc, when you come to submit the return it notifies you that it won’t submit the CGT as it’s not reportable.
That said, I always input it even if it doesn’t subsequently get filed... if HMRC comes back on it, surely that’ll be a good excuse?
It's each individual's share of the proceeds that count. In your case that is less than 4 x the annual exemption.
Who was the vendor? If the property had not been vested in the beneficiaries prior to the sale, it is the PR's, not the beneficiaries who are liable. If the property had been transferred to eight people there would have had to be a trust deed.
With my software, if you add a gain less than the threshold, it removes it. So I'm going with no.
I agree with Montrose that it is likely that the estate is subject to Capital Gains on the disposal, unless as he/she says property had been transferred to the beneficiaries.
Was a professional valuation taken on the property? It seems a very large gain.
